Double the Vision 2017

 

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11h edition of GNZCC bilingual trade publication

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double the vision new zealand-german business guide 11th edition 2017

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Reputation is a Powerful Tool. Thank you New Zealand for consistently voting STIHL as the Most Trusted Brand www.stihl.co.nz 0800 4 STIHL

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14 contEnts 20 36 32 28 FROM OUR AMBASSADORS .................................................................6 COUNTRY SPOTLIGHT .........................................................................10 MARKET ENTRY ....................................................................................14 TRADE FAIRS ........................................................................................16 LOGISTICS ............................................................................................18 ENERGY EFFICIENCY ...........................................................................20 BUSINESS ESTABLISHMENT ................................................................22 THE GERMAN-NEW ZEALAND CHAMBER OF COMMERCE ................26 MANUFACTURING ................................................................................28 GERMAN-NEW ZEALAND FESTIVAL ....................................................30 DIGITISATION & TECHNOLOGY ............................................................32 ORGANIC MARKETS ............................................................................36 IMMIGRATION .......................................................................................40 GNZCC EVENTS IN PICTURES .............................................................42 MEMBERSHIP DIRECTORY ..................................................................44 OKTOBERFEST 2017 ............................................................................50 PREMIUM PaRtnERs ExEcUtIvE MEMbERs DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE 3

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WELCOME Better still, being bilateral we are here for New Zealand exporters, looking at the German market, too – truly Double the Vision! - Monique Surges W hat’s in a name – well actually quite a lot as we have found out! Our name change to German–New Zealand Chamber of Commerce Inc. has been well received and has immensely simpliied our approach to new companies who do not know us. A German Chamber supports new German entrants to the market, provides networking, lobbying and education as well as hands-on services to help companies make informed decisions. Better still, being bilateral we are here for New Zealand exporters, looking at the German market, too – truly Double the Vision! Membership is important to a Chamber and we have happily been experiencing a strong steady growth of members over the years. I will however be the irst to admit it is not easy being a membership organisation in New Zealand and we really do need your support. So please don’t hesitate to get in touch with me about any improvements you feel we should make! Monique Surges Chief Executive Oice German-New Zealand Chamber of Commerce Inc. Was sagt ein Name aus? Scheinbar einiges, wie wir festgestellt haben. Unsere Umbenennung in German– New Zealand Chamber of Commerce Inc. wurde positiv aufgenommen und hat uns die Ansprache neuer Unternehmen und Kunden, die uns noch nicht kennen, vereinfacht. Eine deutsche Kammer unterstützt die Marktinteressen deutscher Unternehmen, ermöglicht Networking, Lobbying und Wissensvermittlung, und bietet Dienstleistungen an, die Unternehmen helfen, fundierte Entscheidungen zu trefen. Besser noch, als bilaterale Repräsentanz sind wir zusätzlich für neuseeländische Exporteure mit Interesse am deutschen Markt da - wahrhaftig Double the Vision! Mitgliedschaften sind ein zentraler Bestandteil unserer Organisation und glücklicherweise haben wir im Laufe der Jahre ein erhebliches, stetiges Wachstum der Anzahl von Mitgliedern verzeichnen können. Zugegebenermaßen, ist es nicht einfach, eine Mitgliedsorganisation in Neuseeland zu sein. Wir brauchen Ihre Unterstützung! Bitte zögern Sie nicht, sich mit mir in Verbindung zu setzen, wenn Sie Verbesserungsvorschläge haben. The longstanding ties that exist between our two countries are founded on our shared values. - Jim Bibby On behalf of the GNZCC Executive Committee, it is my pleasure to extend to you a very warm welcome to this edition of our Double the Vision publication. Whether you are a German-based business looking to establish or strengthen your already existing presence within New Zealand or vice-versa, I hope you ind the enclosed articles relevant, interesting and insightful. The longstanding ties that exist between our two countries are founded on our shared values. This is the clear message that comes through in the enclosed feature articles from our respective embassies in Berlin and in Wellington. It is also a consistent theme we at GNZCC hear across the broader spectrum of our bilateral relationship; whether that be political, economic or cultural. Simply put, the strength and depth of our values-based relationship is the foundation of our mutual trust in each other as a reliable partner and, despite our obvious diferences, our mutual respect for each other. From a business perspective, this is why many German companies look to New Zealand when irst starting out down the path of internationalising their company or enterprise. Despite our small size and our distance from Germany, we ofer a stable and reliable business environment with the added beneit of having the proven know-how on to how to do business in Asia. If you are a German business looking to expand your interests in or around New Zealand, I would encourage you to contact our specialist staf here at the GNZCC. We are here to help. Best wishes for good success in the year ahead. Jim Bibby President German-New Zealand Chamber of Commerce Inc. 4 DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE

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double the Vision Published by German-New Zealand Chamber of Commerce Inc. 188 Quay Street Auckland 1010 Ph. +64 9 304 0120 www.germantrade.co.nz ChieF eXeCuTiVe OFFiCeR Monique Surges Ph. +64 9 304 0120 Email: msurges@germantrade.co.nz Managing ediTOR/WRiTeR Philippa Hendry Ph. +64 9 304 0120 Email: press@germantrade.co.nz design/PROduCTiOn PIXELS&LIGHT - Jaimée Clapham Email: info@pixelsandlight.co.nz www.pixelsandlight.co.nz COnTRibuTORs Embassy of the Federal Republic of Germany in Wellington, New Zealand Embassy in Berlin, Bobux, Miele, Knauf, Germany Trade & Invest, Hesketh Henry, New Zealand Manufacturers and Organic Exporters Association of New Zealand adVeRTising sales ManageR Sandy Motion Ph. +64 9 304 0120 Email: sales@germantrade.co.nz MeMbeRshiP diReCTORy Manuela Curtmann Ph. +64 9 304 0700 PROOFReadeRs Sandy Motion, Monique Surges PRinT Nicholson Print Solutions Auckland, New Zealand FSC accredited printer ©2017 The German-New Zealand Chamber of Commerce Inc. Disclaimer: While the German-New Zealand Chamber of Commerce Inc. has verified the information in this document, we make no representation as to the completeness, correctness, currency, accuracy of fitness for any purpose of the information. While every effort has been made to ensure accuracy, the publisher is not responsible for any damage or loss suffered by any person arising from the information contained in this document. Views expressed in Double the Vision are not necessarily those of the GNZCC. 5

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FROM OUR AMBASSADORS DOUBLE THE PERSPECTIVE German Ambassador to New Zealand, Gerhard Thiedemann, and New Zealand Ambassador to Germany, Rod Harris, reflect on German-New Zealand relations The Beehive, the executive wing of the New Zealand Parliament. Photo: travellight/Shutterstock.com A fter almost a year in oice in New Zealand, I would like to take the opportunity to relect on the thriving bilateral relations our two countries enjoy, as well as show my gratitude for the warm welcome I was ofered. The long bilateral friendship with over 60 years of diplomatic relations is based on our shared interests and values. With the technological innovations of the last decades, the distance separating New Zealand and Germany is merely geographical and no longer an obstacle to a lively exchange. Looking back at my irst couple of months in Wellington, I am pleased to see that this relationship is continuously nourished by mutual visits. I had the honour to welcome Prof Dr Norbert Lammert, President of the Bundestag (the German Parliament), who had been invited to New Zealand by his counterpart the Rt. Honourable David Carter, Speaker of the New Zealand Parliament. That visit clearly underlined the close link of both nations, which Dr Lammert experienced irst-hand in meetings with members of Cabinet and of the New Zealand-German business community. Earlier this year, then newly-elected Prime Minister Bill English was oicially welcomed by German Chancellor Angela Merkel, with full military honours, in Berlin. The two heads of government discussed topics ranging from bilateral relations and economic development to regional and global issues. Mrs Merkel emphasised common values both countries share and underlined Germany’s support for a Free Trade Agreement between the European Union and New Zealand. The scientiic collaboration between institutes and researchers of our two nations is exemplary. Germany is New Zealand’s irst ranked non-English speaking partner in international scientiic projects. This year, we are celebrating the 40th anniversary of our Bilateral Science and Technology Cooperation Agreement. To mark the occasion, the German Research Vessel FS SONNE and the German Embassy invited the public to an Open-Ship day, in Auckland this January, which proved to be a resounding success. Since its implementation in 1977, the Agreement has created links between universities and scientiic Institutions in New Zealand and Germany and continues to promote the exchange of research indings, projects and innovations. Scientists from both countries were able to showcase their fruitful cooperation at the science fair, adding to the popularity of the event. Deputy Head of Mission Thomas Henzschel had the opportunity to show New Zealand Minister of Science and Innovation, Hon Paul Goldsmith, around the vessel. Another scientiic milestone will be the biennial joint meeting of the Australian and New Zealand Association of Alexander von Humboldt Fellows next November, an assembly of leading academics from around the world. The event is planned in cooperation with the With the technological innovations of the last decades, the distance separating New Zealand and Germany is merely geographical and no longer an obstacle to a lively exchange. - Gerhard Thiedemann, German Ambassador to New Zealand Royal Society of New Zealand and supported by the German Embassy. The Royal Society is also involved in the promotion of the Falling Walls Lab 2017, an opportunity for young innovate thinkers from New Zealand and the Paciic to share their ideas, projects or social initiatives, with the winner travelling to the inal competition in Berlin. The International Research Training Group is another bilateral initiative which started its irst project, the collaborative work on soft tissue robotics, at the University of Auckland in partnership with Stuttgart University in March. Apart from our close economic and scientiic relations, New Zealand has also become a popular destination for German tourists and expats. In 2016 alone, 100,000 Germans 6 DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE

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were attracted by New Zealand’s green image, 16,000 young Germans came here under the Working Holiday Scheme - numbers which are increasing steadily. Over 30,000 Germans have made New Zealand their new home. The strong ties between our two nations have also extended into the cultural ield where a lively exchange has developed over the years with many projects done jointly by the Embassy and the Goethe-Institut. As the principal mediator of German language and culture, the latter ofers language courses as well as a wide range of cultural events in cooperation with local partners. A prime example is the annual German Film Festival starting in Auckland on the 6th September 2017 and making its way to Wellington, Christchurch, Dunedin and New Plymouth throughout the month. It presents both recent and classical German ilms all around New Zealand and relects the intensive cooperation of both our cinema industries over many years. Additional to the Embassy’s role in New Zealand, I am also accredited to six Island Nations in the Paciic – Fiji, Samoa, the Cook Islands, Tonga, Tuvalu and Kiribati. We collaborate with their local governments and organisations particularly in promoting and implementing renewable energy projects. Furthermore, the German government is assisting Fiji in its presidency of the global Climate Conference COP 23 in Bonn in November 2017. I am also looking forward to attend the 50th anniversary of the Marine Training Centre in Kiribati, a school German Ambassador Gerhard Thiedemann with the Teimurimotia Volunter Fire Rescue brigade in Rarotonga. Photo: G Thiedemann for Kiribati sailors which I had the pleasure of visiting earlier this year. It is a ine example of German assistance to a developing country – a real success story. I am greatly enjoying my posting in this beautiful country and look forward to a further intensiication of our countries’ mutual friendship. I am also pleased to acknowledge the important role of the GNZCC in supporting our bilateral trade relations. I am ever again pleased to cooperate with its staf and members. ● Gerhard Thiedemann German Ambassador to New Zealand 7 www.tandg.global

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FROM OUR AMBASSADORS Reichstag building, seat of the German Parliament (Deutscher Bundestag). Photo: canadastock/Shutterstock.com double the perspective Part 2: New Zealand Ambassador to Germany, Rod Harris M y irst impressions of the vitality and energy of the modern day relationship with Germany were formed at an excellent event in Auckland staged by the German-New Zealand Chamber of Commerce in mid-2014. This was shortly before I came to Berlin as Ambassador, and I was struck also by the size and diversity of the membership, and by the number of German companies that have a presence in New Zealand. Three very busy years later it’s great to have a chance to relect from personal experience about New Zealand-German business and innovation ties and on where the potential lies to do more together. But let me start with politics and relay what I hear repeatedly, and not just in Berlin: it’s the basic values we share and promote together in the world, often at some cost, that go to the heart of our relationship. Like Germany, we think it’s important to ‘walk the talk’ and typically ind ourselves in the same camp on a range of tough international issues. At the same time, Germany’s role in Europe and globally fully justiies the increased efort we’re making with the relationship. For example there’s been a recent decision to increase the staf in the Berlin Embassy, signiicant given the rigorous iscal environment, and the intensity of very senior political engagement over the last few years is unprecedented and looks set to continue. We’ve had two Prime Ministerial visits to Berlin in the last few years, on top of Chancellor’s Merkel visit in November 2014 which the GNZCC made such a big contribution to. In one three month period last year, I had six Ministers come through Germany. You might ask what all this has to do with business, but there is a connection. Germany has staunchly supported New Zealand’s drive for a Free Trade Agreement with the European Union, and senior German politicians have consistently placed this support in the context of our valuesbased relationship. This support also relects a strategic understanding by many in Germany of the case for closer ties with the Asia Paciic, including with reliable partners like New Zealand – a region with which Germany did about NZ$540 billion of goods trade in the last year. But actually these shared values go much broader than the political. I’ve been struck by the similarities between the two business cultures, with their shared emphasis on doing what you say you’ll do, to a high standard, and with an instinctive understanding on both sides for the small family-owned business structure. That, plus New Zealand’s growing and open economy, helps to explain why goods and services trade has grown strongly to just under NZ$5 billion over the last year. That means Germany is our second biggest trading partner in the European Union and catching up fast to the UK. Most of this increase is driven by German goods exports, up more than 40% since the Global Financial Crisis hit bilateral trade in 2009, and more recently a surge in services trade, not least driven by New Zealand tourism exports. Better access into the European Union under a FTA will hopefully lift our goods exports, which have been steady for several years but surely have room to grow in trade with the fourth biggest economy in the world. Meanwhile, German investment and science partnerships are becoming increasingly important for New Zealand and in my view form two of the areas ofering the greatest potential to do more. I’ve travelled to see investors all over Germany who have businesses in New Zealand. They tell me they rate highly our stability, lack of corruption, rule of law, skilled work force and excellent trade connections into Asia (though sometimes note diferent cultural understandings round deadlines!). Distance is an issue, but they’re making money. In turn, my observation talking to companies at the New Zealand end is that German investment is typically for the long term and adds considerable value to the New Zealand economy, including technology 8 DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE

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I’ve been struck by the similarities between the two business cultures, with their shared emphasis on doing what you say you’ll do, to a high standard, and with an instinctive understanding on both sides for the small family-owned business structure. - Rod Harris, New Zealand Ambassador to Germany New Zealand Ambassador Rod Harris at the 2nd German Asian Business Dialogue. Photo: Praxisnah Kommunikation transfer, a willingness to invest in New Zealand R&D, and a commitment to training and management development. But the overall amount of investment strikes me as modest relative to Germany’s economic size, and my impression from a range of conversations is that the main factor limiting investment is not a lack of opportunity, but a lack of awareness. I believe there is scope for more promotion in Germany of speciic investment opportunities. The science relationship has been strong for many years, and we are seeing it broaden to include promising long term partnerships with the likes of the Fraunhofer Society, and to include new research areas such as sustainable intensiication of agriculture. German and New Zealand scientiic institutions have worked closely with funding bodies to get some big projects launched in recent years, like the International Research Training Group in soft tissue robotics between Stuttgart and Auckland Universities. We’re told the long running maritime research collaboration between Bremen and Waikato Universities was a catalyst in Waikato’s decision to build a campus in Tauranga. Again, values and culture play a vital role. Scientists from both countries repeatedly tell me how much they enjoy working together – something to do with a no-nonsense approach that is focused on substance and, again, being able to rely on the other side doing what they say they will do. The Embassy continues to work with MBIE and its German counterpart, the BMBF, as well as scientists and researchers on both sides, to ind ways to give the science relationship, now in its fortieth year, a further boost. I need to mention inally the rapidly increasing numbers of Germans travelling, studying and working in New Zealand. This is transforming the relationship. Around 16,000 visas were issued to young German Work and Holiday travellers last year, our biggest source in this category from any country, and over 3,000 German students came to New Zealand in the last year. I meet these people or their relatives all over Germany and the goodwill this exchange generates is immeasurable. Also, this level of exchange must surely, over time, support business and innovation ties, but maybe we can do more to facilitate this. I’ve been exploring whether it’s possible, for example, to get better at directing some of these young and talented visitors towards New Zealand companies seeking a link with German businesses, so long as it’s consistent with the terms of the visa. To sum up – this really does feel like a relationship which is only just beginning to discover its full business and innovation potential and I’m excited about the future. I take my hat of to the GNZCC and its membership for your excellent work and want to record my thanks, again, for all you’ve done over the past three years to connect me to the right people in both countries. ● Rod Harris New Zealand Ambassador to Germany 9 Your New Zealand-German Trade Lane Freight Specialist DHL Global Forwarding Products & Solutions (Import & Export): Air Freight Ocean Freight Customs Clearance Local Transport Contact : Zane Morton – Germany - New Zealand Trade Lane Manager DDI +64 9 977 4704 Mobile +64 21 433 861 zane.morton@dhl.com

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COUNTRY SPOTLIGHT UNITED BY IDEAS New Zealand’s and Germany’s economies in 2016 New Zealand and Germany are ‘separated by oceans, but united by ideas’, according to Volkmar Klein, Chairman of the Parliamentary Friendship Group for Relations with New Zealand and Australia. This edition of Double the Vision is about drawing out those common ideas, as well as thoughtprovoking diferences between and challenges faced by Germany and New Zealand. New Zealand saw 3 per cent real GDP growth in 2016, fuelled by booming tourism, strong job growth, high net migration and consumer spending. The major vulnerability facing the economy is high levels of household debt associated with rapid house price increases, particularly in Auckland. Employment has expanded vigorously, reversing much of the increase in unemployment since the onset of the global inancial crisis, with the unemployment rate now at 4.8 per cent. However, productivity remains well below that of leading OECD countries. Inlation has been very low for some time but is on track to return sustainably to 2 per cent by the end of 2018. The government budget is near balance. Expenditure on the November 2016 Kaikōura earthquake rebuild will be much smaller than for the 2010-11 Canterbury earthquakes, but is expected to reach 1-3 per cent of GDP. The German economy also remains in very good shape. In 2016, GDP expanded by 1.9 per cent (price- adjusted), faster than in any year since 2011. In 2016, 43.5 million people were in gainful employment, and this igure is set to increase further in 2017 by 320,000. This means record igures not only for the number of people in work, but also for the number of those paying into social security insurance. The high level of immigration of asylum seekers will only impact gradually. The rise in incomes which is going hand in hand with the labour market development, coupled with a moderate increase in consumer prices, ofers a favourable situation for private households. In 2016, the public-sector budget achieved a surplus of 0.6 per cent in terms of nominal gross domestic product. THE BREXIT EFFECT Both countries are afected by political upheaval: trade is afected by the uncertainty caused by Brexit and, currently to a lesser extent, Trump’s protectionist trade policies. The United Kingdom is Germany’s ifth-largest trading partner and New Zealand’s ifth-largest export market. The Association of German Chambers of Commerce and Industry (DIHK) spokesperson Thomas Renner explains: ‘In 2016, exports to the UK [from Germany] decreased by 3 per cent. Investment decisions will be afected too: a DIHK survey shows that 40 per cent of German companies expect less trading with UK after Brexit and almost 10 per cent plan relocations of investments from the UK.’ New Zealand exports more to the UK than to Germany, France and Italy put together. In the 1970s, three-quarters of New Zealand’s exports went to the UK. This came to an end abruptly with the UK’s entry into the European Economic Community and New Zealand took 20 years to recover from the economic shock. New Zealand has clearly diversiied its economic ties since then although the dependency on the UK has in part been replaced by a dependency on China. The post-Brexit free trade agreements with the UK and the EU have to be rebuilt from the ground up. NEW FREE TRADE AGREEMENTS IN PIPELINE Good thing then that negotiating free trade agreements is one of New Zealand’s strengths and is high on the government’s agenda, with an ambitious goal of having FTAs cover 90 per cent of New Zealand’s goods exports by 2030. Challenges lie ahead for the EU and UK FTAs. Firstly, the FTAs will be shaped by each other, but are at diferent stages of completion. New Zealand is due to begin negotiations with the EU following consultation later this year, but is still at the trade dialogue stage with the UK, i.e. the very early stages. What is agreed between the EU and the UK afects both the New Zealand-EU and New ZealandUK FTAs, and neither party can negotiate FTAs with the UK until it has left the EU. 10 DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE

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New Zealand was ranked as the 50th largest trading partner of the EU in 2016 while the EU represented New Zealand’s second largest trading partner after Australia, so a free trade agreement with New Zealand may not remain near at the top of the EU’s trade negotiation agenda. For both FTAs, New Zealand is likely to meet opposition from farmers – there are sensitivities around agricultural trade with the EU (although probably not so much Germany) and the UK. New Zealand obviously wants to secure as much access as possible. In the UK, farmers will almost certainly receive lower agricultural subsidiaries once the UK has left the EU. UK farmers are also sheep meat producers and exporters to the EU so would be in competition with New Zealand farmers, unless the UK pushes exports elsewhere or export is reduced without the EU subsidies. About 750,000 jobs in Germany depend on trade with the United Kingdom, and German companies maintain about 2,500 branch oices in the UK, which employ nearly 400,000 workers. While it’s still too early to gauge the impact of Brexit, Germany could potentially become more popular as a business destination. In EY’s annual attractiveness survey, Germany was voted Europe’s most attractive business location, joining China and the USA in the global top three business ECONOMIC INDICATORS 2016 Germany Population 80.9 million Net migration rate per 1,000 population (mid-2017) 1.5 GDP (official exchange rate) USD 3.495 trillion GDP - per capita (PPP) USD 48,200 Real GDP growth 1.9% GDP per hour worked (constant prices 2010 and PPPs) USD 59.52 Employment rate of working age population 75% Consumer Price Index inflation 0.23% Total exports of goods and services EUR 1,198.3 billion of which to New Zealand EUR 1,875 million Total imports of goods and services EUR 946.5 billion Trading across borders rank (Doing Business 2017) 38 Starting a Business rank (Doing Business 2017) 114 Sources: CIA World Factbook; Statistics New Zealand; European Commission; World Bank; OECD new Zealand 4.693 million 2.2 USD 179.4 billion USD 37,100 3% USD 37.78 76.3% 0.4% NZD 70.1 billion to Germany NZD 1,506 million NZD 66.4 billion 55 1 locations. The survey was conducted among 505 decision-makers around the world, and included a special section analysing the impact of Brexit on international business both in the UK and elsewhere. ‘This is terriic recognition of Germany as a business location,’ said Dr Benno Bunse, CEO of federal economic development agency Germany Trade & Invest (GTAI). ‘That Germany continues to achieve such recognition within the business world, even in uncertain economic times, is a huge compliment paid to us from the surveyed executives.’ One in ive companies surveyed were looking at relocating or redistributing work away from the UK as a consequence of Brexit. The Guardian reported in July that several hundred banks and companies contacted German authorities about expanding in Frankfurt, as the city vies to become the EU’s principal inancial centre after Brexit. 11 EXTREME OUR WEATHER WILL SCIENTISTS LEAVE MILLIONS WON’T HUNGRY ACCEPT THAT Within the next two and a half decades the global population will grow to over 9.6 billion people. With available arable land per capita shrinking, we need to increase food production by 70 percent to ensure that there is enough healthy and abundant food for all people on the planet. At the same time, harvests are threatened by weather volatility and climate change. That’s why we’re developing more robust, stresstolerant crop varieties that can deliver higher yields in challenging growing conditions. We also offer seeds, chemical and biological crop protection, agricultural services, and decision support for farmers. Food for thought − and for the table. To find out how our innovations are helping to change lives for the better, visit www.bayer.com/ewd1903.

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COUNTRY SPOTLIGHT Photo: Royal New Zealand Navy STEADY EXPORTS AND IMPORTS, BUT ROOM FOR IMPROVEMENT In March, a survey of more than 43,000 people around the world on the most reputable ‘made-in-country’ brands around the world showed that Germany comes out on top as most trusted. There are over 120 German subsidiaries and 300 German brands represented in New Zealand. German goods exported to New Zealand are largely machinery and vehicles, with medicine, medical equipment, blood and antisera making it into the top ten. Motor vehicles are in pole position at a value of NZD 632 million. The top ten goods exports from New Zealand to Germany are heavily concentrated in the primary industries, with sheep meat at number one (valued at over NZD 274 million in 2016). Ninety-ive per cent of New Zealand’s farmed venison goes to Germany. It’s also worth noting that New Zealand’s fruit and vegetable exports to Germany are not always captured, due to being imported to the Netherlands prior to being distributed. Although New Zealand tops the World Bank’s Doing Business report, it costs New Zealanders three times as much to import, and more than twice as much to export, as the average in OECD high income countries. Add to this the time required to comply with customs and other red tape, which takes more than three times longer than the average in OECD high income countries. Germany’s border compliance cost to export is also more than double the OECD high income average, but it performs signiicantly better in the report when it comes to importing. BOTH COUNTRIES’ STRONGEST INDUSTRIES HAVE THEIR PITFALLS Economists are increasingly saying that being a bulk exporter of low-quality dairy products is a risky long-term position for the New Zealand economy, particularly if synthetic meat becomes widely available in an afordable form. A recent OECD report also highlighted the conlict between the government’s target of doubling the value of primary exports by 2025 and reducing environmental impacts. While one ministry was pushing ahead with a national policy for freshwater quality – a move the OECD commended – another had committed to doubling agriculture exports in real terms, and was investing public money into underwriting irrigation schemes without ‘systematic consideration of environmental and community costs.’ For example, Canterbury’s Lake Ellesmere, one of New Zealand’s largest and most polluted lakes, is surrounded by small farming towns using pivot irrigators. Under proposed government standards for water quality, the lake would need to be cleaned up signiicantly. The regional council very recently found that doing so would require almost every dairy farm in the Selwyn District to shut down, resulting in an annual loss of NZD 300 million and high unemployment, depopulation, and bankruptcies for the region. In Germany, the car industry has been plagued by scandal, after illicit collusion between carmakers was revealed. The automotive industry accounts for about 20 per cent of Germany’s industry revenue and employs approximately 800,000 people. ‘If the allegations against the German car manufacturers are conirmed in court, they face very high inancial penalties,’ EU Competition Commissioner Margrethe Vestager said. A majority of Germans is now in favour of banning diesel cars that don’t live up to modern emission standards. MOVEMENT OF PEOPLE Aside from goods and services, New Zealand and Germany also exchange people. Germany is New Zealand’s 6th most important source of students. Of the European countries, it’s number one. Germany is also New Zealand’s secondlargest visitor market in Europe. In 2016, 100,000 Germans visited New Zealand and 16,000 young Germans travelled to New Zealand under the Working Holiday Scheme - numbers which are increasing steadily. For the year ending December 2016, tourism (including air travel) was worth NZD 12.17 billion or 17.4 per cent of exports. More than 30,000 Germans have made New Zealand their new home. In 2016, there were 3,045 New Zealanders living in Germany. New Zealand has recently tightened its visa conditions. As Immigration Minister Michael Woodhouse says, ‘The Government is committed to striking the right balance between ensuring New Zealanders are at the front of the queue for jobs and making sure our regions have access to temporary migrant labour necessary for sustained economic growth.’ UNFORESEEN PUBLIC SPENDING In Germany, the number of asylum seekers into the country plummeted by more than 600,000 last year (less than a third of those at the height of the crisis) since the implementation of the controversial EU-Turkey deal last March, which aimed to slow boat crossings to Greece by seeing anyone arriving detained under threat of deportation. German states spent more than EUR 23 billion on refugees in 2016, government igures have indicated. Despite the huge inancial cost of the ongoing crisis, Germany’s federal government announced a budget surplus of EUR 6.2 billion last year. In New Zealand, government spending was turned upside down by the 14 November 2016 Kaikōura earthquake in the South Island of New Zealand, with a magnitude of 7.8 (Mw). A New Zealand Government-commissioned report of February 2017 estimated that in the 18 months from the November 2016 earthquakes, New Zealand’s gross domestic product would drop by NZD 450 million to NZD 500 million. As well as increased travel costs because of longer routes, the study took into account 12 DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE

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the loss and degradation of perishable products, wine-production losses, KiwiRail losses in revenue and the loss of whale-watching activities. The review on the costs of the earthquakes said that while Kaikōura had the biggest drop in tourist spending after the tremors, other districts picked up some of the business, especially the Nelson-Tasman region. ‘Increased freight transport costs and impacts on businesses from infrastructure damage and transport disruptions are the two key contributing factors,’ Transport Minister Simon Bridges said. State-subsidised house building was signiicantly reduced in the 1970s, and the market hasn’t illed that gap: New Zealand now has a cumulative gap of 500,000 houses. Bernard Hickey jokingly describes a typical house construction in New Zealand as being carried out by ‘a man and his son with a dog and a ute’, typically building a house bigger than the market demands, as there is no incentive to build a cheaper, smaller home. He describes the challenge faced by overseas builders, such as a US company who scouted out the situation in Auckland: they found that in order to Housing is at the centre of all our economic and social problems. - New Zealand financial journalist and editor Bernard Hickey HOUSING – THE BIG CHALLENGE New Zealand has the most unafordable housing in the world, according to The Economist. ‘Housing is at the centre of all our economic and social problems,’ says leading New Zealand inancial journalist and editor Bernard Hickey. The New Zealand Herald recently reported that the number of child deaths linked to cold, damp or crowded homes are higher than the number of children killed in car accidents or drownings. build lots of prefabricated homes, they would irst have to invest in a factory worth NZD 300 million, which wouldn’t pay of when building homes for a city with a population of 1.5 million. In Hickey’s opinion, the large number of warm and dry, small, afordable homes can only be provided by the state. Germany is a nation of renters. Almost 50 per cent of Germans rent their homes, whereas the New Zealand home ownership rate is 64.8 per cent. Berlin has a residential property vacancy rate of only 1.5 per cent, not much higher than Auckland’s vacancy rate of 1 per cent, where nearly 50 prospective tenants vie for each rental property. Germany’s capital is currently growing by about 40,000 people annually, needing some 31,230 new homes every year. For comparison, the Auckland region grew by 44,500 people in the year ending June 2016. Berlin has the same lack of smaller homes. State property companies only account for about 16 percent of Berlin’s property. A study by the economic think tank Cologne Institute for Economic Research (IW) showed that only 20 per cent of the required two-room apartments were being built in Berlin. For study author Michael Voigtlände, the problem is obvious: lack of space. ‘The investors do want to build, but there’s a lack of building land,’ he said. ‘And if there’s a lack of building land, then of course they build what gets them the biggest margins - and that’s the biggest and most expensive apartments.’ ● Sources: Germany Trade & Invest; German Federal Ministry for Economic Affairs and Energy; The Local; New Zealand Trade & Enterprise; Statistics New Zealand; New Zealand Treasury; European Commission; Bloomberg; CIA World Factbook; Deutsche Welle; Stuff.co.nz; Huffington Post; The Guardian; The Independent, Destasis; The Economist; The New Zealand Herald; Reuters; Business Insider Deutschland 13 We create chemistry that makes our world love change. The world is changing fast. To make sure that it is for the better, we are co-creating innovative solutions that will help tomorrow’s generation enjoy a better life and a more prosperous planet. When we come together to help ideas soar, it’s because at BASF, we create chemistry. © Copyright BASF 2017 ® Registered trademark of BASF. W212196 06.2017

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MARKET ENTRY Expanding across thE globE Bobux and Miele share their experiences Photo: Sara Orme bobux Bobux makes the best shoes in the world for growing feet. They export to 38 countries, with a main focus on Europe. One of the many accolades Bobux have received for their innovative footwear is the Red Dot design award from Germany. CEO Andrew Sharp shared some insights into entering the German market at the GNZCC’s Exporting to Germany workshop. Andrew Sharp, CEO of Bobux What do New Zealand companies need to consider before trying to bring their product to the German market – how did Bobux do it? Fall in love with your problem, not your solution. When the only solution you have is a hammer, every problem is a nail to you. You’re going to hammer every problem with your solution, whether it its or not. What we know from the philosophies that we’ve built—the Bobux Way that comes from combining LEAN principles and design thinking—is to talk extensively with your customers until you deeply understand their problem that you are solving and then fall in love with that. Then when it comes to the solutions you’ll be a bit more lexible and not mentally tied to your solution as the only way to solve it. Do the consumers we want to reach have the problem we had when we built the solution? If they don’t—no matter how amazing your product is—it won’t sell. How should New Zealand companies generate interest in their product once they have established that product-market it? Once you’ve got your product-market it, don’t broadcast too many diferent things that your product does. What is the one thing that your product does that ixes the problem that they have? Yes, you have seventeen other features and beneits that are wonderful, but one thing is going to sell it. Because it’s a very crowded and noisy market, particularly in Germany, if you are confused and you give an image of confusion, you will be shut down by your customers. For Bobux, it was all about foot health so that meant to get the soft sole products in and then expand. You can aford to miss out on other opportunities initially as long as you execute well on one. What do New Zealand companies need to do in order to sell and expand in Germany? Dream big, start small and move fast. We thought, how are we going to multiply sales in Germany by ten? Check out the ten retailers that are inluential– get in the door by doing a deal, even giving them shoes. You have to be seen in the right places. That’s how we dream big – but then we start small. We did our research and we focussed on selling on a city-level in a region where there’s likely to be demand due to demographics. Through social media, we can market within a ive kilometre radius of ive shops that stock our product. It’s very targeted. Then, we move fast. As soon as someone says they want something, if you don’t deliver it within a day, you’ve probably lost the sale. German eiciency isn’t just something we talk about – if you aren’t eicient and efective at what you do, you’ll be dismissed. So stick to one problem, one solution, one city. Then start selling—then you can expand. miElE Miele manufactures household appliances for the kitchen, the laundry room and for loor care, as well as appliances for use in commercial operations and medical facilities (‘Miele Professional’). In many countries, Miele is the most desired brand in its branch of industry. In its own home market in Germany, Miele was even voted ‘best brand ever’, across all product branches. Miele’s National Sales 14 DOUBLE THE VISION || NEW ZEALAND-GERMAN BUSINESS GUIDE

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Manager in New Zealand, Brian Scott, and Miele Managing Director ANZ, Sjaak Brouwer, shared with us how Miele entered the New Zealand market. Sjaak Brouwer, Miele Managing Director ANZ What did Miele consider before entering the New Zealand market – how did you do it and what challenges did you face? Miele commenced its New Zealand operation in 2008; however, the brand had been operating in the New Zealand market though a distributorship agreement with Steelfort since the early 1990s. The challenge we were mindful of was that the NZ marketplace was like no other worldwide, due the strength of a local manufacturer who enjoyed a dominant position in the market and local distribution support. We knew that we would have to make a substantial investment and look for opportunities that were diferent to what was available at the time of entry. We were conident that the brand was positioned correctly in the market but we needed to ensure that our ofering would be diferent to others. Tell us about Miele’s business model and your focus in New Zealand? The Miele Australian operation was the irst VG outside of Europe and had been successfully established based on the Miele Charted Agency (MCA) business model. This new and creative business model rewarded retailers who invested in staf training and customer service and has been a major inluence in Australia’s success over the last 25 years. This model was adopted for the NZ market also. Additionally we decided to completely focus on the total customer experience, from product selection, in store service, live pre purchase-cooking demonstrations, post purchase and service support. This required a signiicant investment to efectively launch a new brand into the marketplace. From day one, Miele ensured that our valued retail partners were at the forefront of the operation, completely informed and included as true partners. The business was structured in such a way as to ensure all stakeholders were beneiciaries of the investment. We required professional retail sales staf, qualiied chefs who not only knew how to produce quality food but also know how the product is able to enhance the cooking process, as well as ield sales staf that understood the MCA system and all the beneits it ofered. We rolled out an ecommerce online ordering and reporting system where every store could complete an order, directly in the Miele system, with their own sales staf. The plan has always been to undertake our own service requirements and home deliveries, again with the aim of providing a full customer service package. How did Miele generate interest in their product in New Zealand? As Miele brand awareness was low, there has been a signiicant investment in marketing including brand campaigns, retail events and sponsorships. Miele has partnered with award winning NZ chef Michael Meredith who has participated in brand campaigns, recipe development and events. As a German subsidiary, how does Miele operate in New Zealand and what have you learnt? While New Zealand is a fully ledged subsidiary of Germany, we do operate day to day by purchasing support from the Australian subsidiary. Through this support, we are able to maximise resources to enable staf to focus on speciic functions and are not hamstrung with general administration activities. In summary, the most important lesson Miele has learnt in New Zealand is that while New Zealand and Australia look and feel similar, their marketplaces are diferent. The economy is driven by diferent factors and the people think and act diferently. ● 15 Now is calling The all-new Audi Q5 with the new, efficient quattro with ultra technology. audi.co.nz/Q5

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